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Is this any way to run a railroad?

Some in Silicon Valley believe it's time for Caltrain to get a new business model or pull up stakes

Photo by Veronica Weber/Palo Alto Online.

Tom Means, Mountain View City Councilman and San Jose State University economics professor, has harsh words for Caltrain proponents who are trying to stave off the decline of the commuter-rail service.

When the Silicon Valley Leadership Group recently asked the council for $2,000 to help fund its Jan. 21 "Save Caltrain" summit, council members turned the group down.

"They put on these dog-and-pony shows -- 'Let's get together and do something!'" he said.

"My concern is they are going to throw bad money to fix something that can't be fixed. What they don't know how to deal with is how to run a profitable business. Caltrain is a company that has lots of passengers but can't figure out how to be profitable. If these agencies think we can depend on public coffers to fix our debts, they'll never fix the problem," he said.

But there are private trains that are run successfully, he said. "You buy stock and get dividends. I'd like to see some people who have business backgrounds (running Caltrain)," he said.

"Before anything is done to help Caltrain, they have to get their house in order," he said.

"Caltrain as an organization should be terminated. They should go bankrupt, go into receivership and be replaced with an entirely new management team, or better, restructured into a more comprehensive and integrated mass-transit system.

"Whether Caltrain survives is not an important question. Perhaps they shouldn't, since the subsidized annual cost per daily rider exceeds $3,000. That's calculated on the basis of a 40 percent farebox return."

Engel does think there should be an effective, cost-effective commuter rail service on the Peninsula.

"It certainly doesn't need to be heavy-rail, like the current rolling stock, since that's a vestige of the freight-operator technology of yesteryear," he said.

Part of the problem lies in Caltrain's perception of itself, he said.

"They think they are in the railroad business, when they should understand that they are in the urban commuter mass-transit business. There's a huge difference in business models," he said.

Caltrain focuses more on solving problems around fixed assets rather than on how to provide and coordinate service for its passengers, he said.

Engel said as an example, BART could take over Caltrain. A close integration and coordination would successfully link the two operators into one, he said. "That would mean a complete transit rail 'spine' ringing the Bay: single fare for any length trip; single financing model."

Posted by Rober
a resident of Mountain View
on Feb 11, 2011 at 2:13 pm

By "profitable" does he mean a direct return on investment? If that's the standard than we should have no roads, airports, or any other public services. Having transportation infrastructure provides an economic benefit through increased productivity, but anyone who thinks public money invested in roads, rail, or airports should generate a direct profit is an idiot.

Posted by Wayne Martin
a resident of Fairmeadow
on Feb 11, 2011 at 7:06 pm

Caltrain's yearly Ridership report show that during the weekday about 8500 unique people, from San Jose's 1+M population, and 2,500 unique people from San Francisco's 800,000+ population, board trains headed north and south. Together, this very small group generate about 55% of the passenger traffic of the whole Caltrain system on a weekday basis. These 11,000 unique people constitute less than .4% of 3+M living in Caltrain's Peninsula service area.

Looking forward at Caltrain’s funding problems, and understanding the extremely high costs of government-managed/subsidized transportation systems, the operating/maintenance costs of this system can be shown to be about $8+B for the coming 30 years. That’s $8+B providing transportation for no more than 18,000-20,000 unique people a day.

Our Bay Area highway system, on the other hand, provides perhaps half-million(estimated) "trips" for vehicles of all kinds for the 6.5+M residents, and who knows how many travelers who pass through the Bay Area on a daily basis. There is no one in the Bay Area who is not dependent on the goods that are delivered, and the services that are facilitated, on Highway 101 and Highway 280. Caltrain, on the other hand, outside of transporting this small segment of our population, does not enable our general economy, as these two highways do.

Caltrain needs to be terminated, and any/all public dollars intended for its future improvement redirected to our very neglected, and very useful, highway system.

Posted by righttrack
a resident of another community
on Feb 12, 2011 at 11:20 am

I agree with Rober - there is no passenger rail system in the world that isn't subsidized by government(tax) dollars. Most public transit rail systems are lucky to return 40% of their operating costs through the farebox. The rest is made up with our tax dollars.

Posted by who cares
a resident of Triple El
on Feb 12, 2011 at 12:57 pm

Finally a sensible voice from the malarkey calling itself government. The Silicon Valley Management Group, or "Leadership Group" as they now call themselves, have never saw a tax they didn't like, unless of course, if it involved imposing taxes on business's belonging to this rogue group. The free ride is over.

Posted by Terry
a resident of another community
on Feb 15, 2011 at 10:03 pm

We heavily subsidize our highways and airports. Does anyone think our highways or airports pay for themselves let alone generate a profit? Only Americans fail to see the potential in rail systems. WE have no room to expand our highways as some have suggested. Rail is the only area with growth potential. Look around the world. In Europe, Japan and China they have rail systems that make us look like a third world country. But then they have the guts to tax themselves to make these long-term investments in their infrastructure.

Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 20, 2011 at 11:56 am

who cares, a resident of the Triple El neighborhood, on Feb 16, 2011 at 5:45 pm, opined:

"Public subsidization of government waste and feel good programs is no longer sustainable. So long to the choo choo train."

Why do you think a modern transportation system is a "choo choo train"?
Strange.

In any case -- sure, let's drop *all* subsidies. No income, sales, property taxes, or health insurance premiums to pay for roads, CHP, auto "accident" victims, etc. Let's drop all subsidies for commercial trucking. All subsidies for air travel. All subsidies for canals and waterways. Then, let's see if trains can compete.

Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 20, 2011 at 12:05 pm

"Tom Means, Mountain View City Councilman and San Jose State University economics professor, has harsh words for Caltrain proponents who are trying to stave off the decline of the commuter-rail service" :

... "Caltrain is a company that has lots of passengers but can't figure out how to be profitable. If these agencies think we can depend on public coffers to fix our debts, they'll never fix the problem," he said.

"But there are private trains that are run successfully, he said. "You buy stock and get dividends. I'd like to see some people who have business backgrounds (running Caltrain)," he said.

I'm glad he isn't *my* econ professor, sigh.

Professor Means, can I please opt out of all the other taxes, fees, and indirect health insurance costs that I pay that results from auto transportation? I would much rather pay it all as a gas tax. What do you calculate the gas tax to be, Professor?

Why do auto proponents think they can depend on public coffers to fix our debts?

CalTrain is not the way to run anything, except that it pays very high union salaries, and indirectly supports all the union politicians who continue to throw more good money after bad. The gravey train is dead now.

I like Martin Engel's idea about defining CalTrain as a commute train only (no more freight...the SF Penn. is no longer an industrail base). Then put it out to bid. Maybe BART wants a piece of it, but private contractors should also be in the bidding process. However, it should be run as a union-free system, and that should be part of the bid package.

Posted by Resident
a resident of Another Palo Alto neighborhood
on Feb 20, 2011 at 4:29 pm

Anon and David

I think you have got what Tom Means said wrong. The article and in particular the first paragraph seem to say the exact opposite of what the end of the article is stating that Tom Means said.

Means is pointing out that the present way to run a transit authority is not the way to make it work. He is pointing out that running a typical railroad is not the same as running a succussful commuter, suburban rail transport. His thoughts on the difference are not explained, but should have been.

We are not talking about rail v roads (or bridges, or tunnels). We are talking about giving commuters options. The way Caltrain is being run is taking away options and give many commuters no option but to take the train.

The Bay Bridge upgrade is being done by taxpayer money. The new bore on the Caldicott tunnel and the Devils Slide, are paid for by taxpayer money. These new transportation upgrades will benefit all of us even if we don't use them on a daily, or even weekly basis. But they will make Bay Area traffic that little bit easier. Why can't we look at an upgrade to Caltrain, or BART, or VTA, as beneficial to the Bay Area traffic. The Bay Bridge will not be increasing its toll above the other bridges. The Caldicott tunnel and Devils Slide tunnel will not be charging for those who use it.

It is ludicrous to think that the costs of any upgrade to the Caltrain system should be borne only by its riders. Caltrain is an amenity just like tunnels and bridges, highways, expressways and shuttles.

Caltrain works for thousands of people every day. It could work for thousands more if it considered itself a service rather than a business. A service just as much as a bike lane, a traffic light, a freeway on ramp, or metering lights, are not money makers but they are just services for the ability of moving people around the way they want at the time they want.

Posted by Anon
a resident of Another Palo Alto neighborhood
on Feb 20, 2011 at 6:22 pm

If the article misrepresented what Tom Means said, I apologize. But, CalTrain is actually more cost effective than most forms of transportation, public or private -- it just doesn't have the same level of tax support that either BART or autos have.